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Economic turmoil

  • COURTESY ENA MEDIA HAWAII AND BLUE HAWAIIAN HELICOPTERS
    The advancing lava in Pahoa poses a serious threat to the economy as several businesses have already closed their doors. An aerial photo taken Tuesday shows the flow in the top-left corner.
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Business for now is red-hot in historic Pahoa as tourists and others fascinated by the volcanic power of Madame Pele wander the streets of the vulnerable town. But the economic boom could be short-lived if molten lava from Kilauea Volcano cuts off the town’s Highway 130 lifeline, forcing traffic on a newly opened gravel alternative miles away.

The situation could grow more dire if the flow continues its march all the way to the sea, isolating the entire lower Puna District from Hilo and the rest of the island.

Even if the Chain of Craters Road alternate route is reopened in December as expected, the crisis could throw the lives of thousands of residents in financial turmoil and cast a pall of uncertainty over the companies and farms doing business in the region.

In reality, the economic calamity has already started as some businesses have shut down, schools have closed, some major projects have been put on hold and people have moved away.

"The exodus is already happening," said Tiffany Edwards Hunt, a Pahoa merchant and a Hawaii County Council candidate who has watched a handful of businesses close their doors in recent weeks and residents relocate to Hilo and elsewhere.

Mark Kimura, a University of Hawaii at Hilo researcher in economic geography, said some 9,400 people and 257 businesses supporting nearly 1,200 jobs are located in the area of Puna that would be cut off by the lava flow now threatening the Pahoa area.

If the region is sliced into two, businesses on the south side of the flow likely would see fewer customers as many would be unwilling to make the longer trek, and bottom lines would be affected by the additional cost of shipping, either in or out of the area.

Hawaii’s papaya industry would likely feel some pain as more than half of the state’s papaya farms are located in lower Puna, Kimura said.

It’s highly possible properties would decline in value and those who own their homes and want to relocate may be unable to sell at a price high enough to pay off their mortgage, a scenario that could lead to a surge in bankruptcies.

Logistical inconveniences and the cost of living would increase for those who do stay as the essentials of everyday living — water, food, gasoline — would be much harder to obtain, while commuting to work — or for any other reason, for that matter — would cost more in both time and money, Kimura said.

According to a survey of residents conducted by Kimura, 40 percent of those who indicated they are planning to stay in lower Puna are doing so because they can’t afford to move.

The survey, taken last month, also found that a third of the residents commute between lower Puna and somewhere outside of the area. For them, he said, the price of travel will undoubtedly go up.

For example, a Pahoa resident who works in Hilo drives about 20 miles. But if Chain of Craters Road were the only way out, the drive would be a haul of 72 miles.

Kimura said he did a quick calculation to estimate how much additional gas money would be required of the owner of a car that gets 25 miles per gallon.

"It’s approximately $4,000 per year," he said. "Also, that’s just an economic burden based on distance. The commuters could also be spending additional three hours in their cars — that’s assuming that there’s no heavy traffic. It is highly likely that the added traffic volume will increase drivers’ frustration levels."

Even before the lava flow inflicts any major damage, it has taken a toll on the area’s economy: Several major construction projects that were in the works have been thrown into uncertainty, including a $22.3 million expansion of Pahoa Park, plans for a new emergency room at the Puna Community Medical Center in Pahoa, and a $20 million shopping center in Pahoa with a supermarket, medical offices and restaurants.

Puna state Sen. Russell Ruderman, who owns the local Island Naturals market and deli chain, said he recently bought the property next to his Pahoa store with plans to double its current 5,000-square-foot size. Now, that’s on hold.

Ruderman, who lives in Puna north of the flow, said the store is safe for now, about a quarter-mile away to the south of the flow. If Highway 130 gets cut off at the point the flow is threatening, Island Naturals will be the only food store south of the flow.

"We’ll be OK in the short run," he said. "In the long run? We gotta see what happens. We’ve just got to prepare the best we can and hope for the best and enjoy the time we have. I’m trying not to give in to worry and fear."

Ruderman (D, Puna) said thankfully his delivery people have agreed to take the gravel Railroad Avenue detour to the store as long as there are customers in Pahoa to serve. The new route could add anywhere from 20 minutes to an hour to the trip.

Getting cut off from the rest of the island will be tough, Ruderman said, but the lower Puna district, perhaps like no other region, has the mental makeup to handle the situation. The area is relatively isolated with many already living off the grid and growing their own food.

"This may force a faster track to greater sustainability," he said. "There will be a lot of reasons to support the local community. It’s kind of a good thing in that way."

Ruderman said he’s trying to stay positive and contends there may even be an unexpected benefit to the current crisis. Authorities may be forced to create infrastructure previously neglected for Puna, such as a harbor and small airport.

In addition, he said, there may be those willing to invest in new business opportunities, such as a gasoline station, hotel, schools and other ventures needed to serve the lower Puna community.

The isolation, he said, could actually make Pahoa more attractive as a tourist destination, an out-of-the-way place worthy of a long drive — kind of like the Big Island version of Maui’s Hana or Kauai’s Hanalei.

Ruderman said it could appeal to tourists seeking adventure in a place separated from the world.

"We could sell T-shirts that say, ‘I drove to Pahoa,’" he said.

Mark Hinshaw, president of the Mainstreet Pahoa Association, agreed.

"We’re trying to be as positive as we can about it, while being mindful of the people affected. But in the long term, we’ll be OK. The visitors will still come," Hinshaw said.

Kimura said it’s possible the lower Puna district will forge a new isolated economy, but it will not be an easy path. To prosper, he said, business owners would have to be extremely innovative and creative.

"It’s not impossible," he said. "Sometimes added challenges do promote innovations. I hope it will happen to lower Puna."

Kimura said he can see a shrinking population in the far part of lower Puna forming a relatively comfortable and charming community like Hawi.

"They may no longer have Longs Drugs or a large Malama Market, but a few perfectly good small-scale grocery stores. If — and very hypothetically — a new shopping center emerges in, say, Volcano, they wouldn’t mind occasionally driving a bit far to buy items that are beyond bare necessities."

Hunt, who runs Jeff Hunt Surfboards in Pahoa, said for now business is great. She sold out of some volcano soaps that say "Pahoa burns down for what?" and she has more on order, along with some specially designed Pahoa T-shirts and hats she hopes to sell to the new influx of tourists.

"We’re doing what we can to stay open and move some inventory," she said.

But Hunt can’t help but get depressed about the future. She said she’d like to think Pahoa will emerge through this crisis with a viable economy, but she’s not so sure.

"In my mind, it is so hard to be so completely gloom and doom. But it’s hard for me to be too Pollyanna about it," she said. "It’s going to be tough times in the short term, that’s for sure."

PAHOA BY THE NUMBERS

POPULATION

865

EMPLOYED

393

UNEMPLOYED

73

MEDIAN HOUSEHOLD INCOME

$45,556

PER CAPITA INCOME

$20,183

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